Real Economic Development Starts At Home
To the lamb and the leopard lying down together, we now must add credit unions and banks at least when it comes to Lawrence, Massachusetts.
I normally am very skeptical of stories highlighting how well credit unions and banks would get along but for all those politicians and trade associations that get in the way. Credit unions shouldn’t forget that it is the ultimate goal of the banking industry to strangle credit union growth.
But there is a great article in the American Banker this morning about how 6 banks and 4 credit unions have created a $2.5 million dollar fund to offer credit to start-ups in Lawrence. It has already closed seven deals totaling $500,000 and it expects to have all the monies lent out in the next 12-18 months. The fund may be recapitalized.
I love this and similar stories like it for many reasons. First, this is real economic development. Lawrence is a classic Empire Falls community; it is one of those aging little towns, so common in the northeast, filled with fading emblems of bygone dynamism. It is the type of place that needs investment. While the government can help, true economic development almost always is organically led by private businesses. Government doesn’t underwrite so much as throw money at problems and see what sticks. Besides, I have repeatedly been told that with government help comes a pile of red tape. How else to explain the lack of all but the largest credit unions participating in SBA loan programs.
What I also love about this story and stories like it is that you have local business leaders doing what is best for the community in which they live. It demonstrates that we really do lose something when financial institutions become regional and national businesses. as opposed to remaining tethered to the communities from which they grew. Economies of scale make this trend inevitable but there really is something valuable being lost along the way.